BILL NUMBER: AB 2594	CHAPTERED  09/29/00

	CHAPTER   843
	FILED WITH SECRETARY OF STATE   SEPTEMBER 29, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 28, 2000
	PASSED THE ASSEMBLY   AUGUST 22, 2000
	PASSED THE SENATE   AUGUST 18, 2000
	AMENDED IN SENATE   JUNE 19, 2000
	AMENDED IN ASSEMBLY   MAY 31, 2000
	AMENDED IN ASSEMBLY   MAY 26, 2000
	AMENDED IN ASSEMBLY   MAY 3, 2000

INTRODUCED BY   Assembly Member Cox

                        FEBRUARY 25, 2000

   An act to amend Section 650 of the Business and Professions Code,
to amend Sections 750 and 1873 of the Insurance Code, and to amend
Section 549 of the Penal Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2594, Cox.  Insurance fraud.
   Existing law relative to insurance fraud generally provides that
it is a crime for healing arts practitioners to receive money or
other consideration for, or to engage in various related activities
with respect to, the referral of patients, clients, or customers to
any person, with certain exceptions, as specified.  Similar
provisions in the Insurance and Penal Codes apply to persons engaged
in the processing, presenting, or negotiation of claims and to
persons in general.  Existing law specifies varying criminal
penalties for these various offenses, generally providing for a fine
of up to $10,000 or one year in jail or prison, or both the fine and
imprisonment, as specified.
   This bill would instead provide, upon a first conviction, for a
fine of up to $50,000 for these related public offenses and the
possibility of one year in jail or prison, or both the fine and
imprisonment.  This bill would provide for a 2nd or subsequent
conviction to be punishable by imprisonment in the state prison or by
that imprisonment and a $50,000 fine.
   Existing law authorizes certain peace officers to submit a written
request to an insurer for relevant information that the insurer may
have relating to insurance fraud.
   This bill would correct certain erroneous cross-references in that
authorization provision.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 650 of the Business and Professions Code is
amended to read:
   650.  Except as provided in Chapter 2.3 (commencing with Section
1400) of Division 2 of the Health and Safety Code, the offer,
delivery, receipt, or acceptance by any person licensed under this
division of any rebate, refund, commission, preference, patronage
dividend, discount, or other consideration, whether in the form of
money or otherwise, as compensation or inducement for referring
patients, clients, or customers to any person, irrespective of any
membership, proprietary interest or coownership in or with any person
to whom these patients, clients or customers are referred is
unlawful.
   The payment or receipt of consideration for services other than
the referral of patients which is based on a percentage of gross
revenue or similar type of contractual arrangement shall not be
unlawful if the consideration is commensurate with the value of the
services furnished or with the fair rental value of any premises or
equipment leased or provided by the recipient to the payer.
   Except as provided in Chapter 2.3 (commencing with Section 1400)
of Division 2 of the Health and Safety Code and in Sections 654.1 and
654.2, it shall not be unlawful for any person licensed under this
division to refer a person to any laboratory, pharmacy, clinic
(including entities exempt from licensure pursuant to Section 1206 of
the Health and Safety Code), or health care facility solely because
the licensee has a proprietary interest or coownership in the
laboratory, pharmacy, clinic, or health care facility; provided,
however, that the licensee's return on investment for that
proprietary interest or coownership shall be based upon the amount of
the capital investment or proportional ownership of the licensee
which ownership interest is not based on the number or value of any
patients referred.  Any referral excepted under this section shall be
unlawful if the prosecutor proves that there was no valid medical
need for the referral.
   "Health care facility" means a general acute care hospital, acute
psychiatric hospital, skilled nursing facility, intermediate care
facility, and any other health facility licensed by the State
Department of Health Services under Chapter 2 (commencing with
Section 1250) of Division 2 of the Health and Safety Code.
   A violation of this section is a public offense and is punishable
upon a first conviction by imprisonment in the county jail for not
more than one year, or by imprisonment in the state prison, or by a
fine not exceeding fifty thousand dollars ($50,000), or by both that
imprisonment and fine.  A second or subsequent conviction is
punishable by imprisonment in the state prison  or by imprisonment in
the state prison and a fine of fifty thousand dollars ($50,000).
  SEC. 2.  Section 750 of the Insurance Code is amended to read:
   750.  (a) Except as provided in Section 750.5, any person acting
individually or through his or her employees or agents, who engages
in the practice of processing, presenting, or negotiating claims,
including claims under policies of insurance, and who offers,
delivers, receives, or accepts any rebate, refund, commission, or
other consideration, whether in the form of money or otherwise, as
compensation or inducement to or from any person for the referral or
procurement of clients, cases, patients, or customers, is guilty of a
crime.
   (b) A violation of subdivision (a) is punishable upon a first
conviction by imprisonment in the county jail for not more than one
year, or by imprisonment in the state prison, or by a fine not
exceeding fifty thousand dollars ($50,000), or by both that
imprisonment and fine.  A second or subsequent conviction is
punishable by imprisonment in the state prison or by imprisonment in
the state prison and a fine of fifty thousand dollars ($50,000).
   (c) Nothing in this section shall prohibit a licensed collection
or lien agency from receiving a commission on the collection of
delinquent debts nor prohibits the agency from paying its employees a
commission for obtaining clients seeking collection on delinquent
debts.
   (d) Nothing in this section is intended to limit, restrict, or in
any way apply to, the rebating of commissions by insurance agents or
brokers, as authorized by Proposition 103, enacted by the people at
the November 8, 1988, general election.
  SEC. 3.  Section 1873 of the Insurance Code is amended to read:
   1873.  (a) Upon written request to an insurer by officers
designated in subdivisions (a) and (b) of Section 830.1 and
subdivision (a) of Section 830.2, and subdivisions (a), (c), and (i)
of Section 830.3 of the Penal Code, an insurer, or agent authorized
by that insurer to act on behalf of the insurer, shall release to the
requesting authorized governmental agency any or all relevant
information deemed important to the authorized governmental agency
that the insurer may possess relating to any specific insurance
fraud.  Relevant information may include, but is not limited to, all
of the following:
   (1) Insurance policy information relevant to the insurance fraud
under investigation, including, but not limited to, any application
for a policy.
   (2) Policy premium payment records which are available.
   (3) History of previous claims made by the insured.
   (4) Information relating to the investigation of the insurance
fraud, including statements of any person, proof of loss, and notice
of loss.
   (5) Complete copies of both sides of payment drafts.
   (b) The provisions of subdivision (a) shall not operate to
authorize disclosure of medical information not otherwise authorized
for disclosure pursuant to law.
  SEC. 4.  Section 549 of the Penal Code is amended to read:
   549.  Any firm, corporation, partnership, or association, or any
person acting in his or her individual capacity, or in his or her
capacity as a public or private employee, who solicits, accepts, or
refers any business to or from any individual or entity with the
knowledge that, or with reckless disregard for whether, the
individual or entity for or from whom the solicitation or referral is
made, or the individual or entity who is solicited or referred,
intends to violate Section 550 of this code or Section 1871.4 of the
Insurance Code is guilty of a crime, punishable upon a first
conviction by imprisonment in the county jail for not more than one
year or by imprisonment in the state prison for 16 months, two years,
or three years, or by a fine not exceeding fifty thousand dollars
($50,000), or by both that imprisonment and fine.  A second or
subsequent conviction is punishable by imprisonment in the state
prison or by imprisonment in the state prison and a fine of fifty
thousand dollars ($50,000).
